The IRS and Civil Society

Patrice J. Lee

Scrutinizing the applications for tax exemption is rightly within the IRS’s job description. In fact, the IRS should be diligent in ensuring that groups seeking exemption are not fronts or shams. There are over 1 million nonprofit organizations in this country with exemptions and many are defunct.

However, when the actions of IRS agents appear to be arbitrary, unequal, or discriminatory, we have to question whether deleterious motives are at play.

An IRS agent was caught red-handed telling the head of a Texas group, which provides support to women in abusive circumstances, that to obtain a tax exemption they must refrain from discussing their faith and be neutral on certain issues. After two-and-a-half years of leaping through hoops the embattled group finally received its exemption last week.

The IRS agent appears to have been promoting her own agenda. She used her position, power, and influence to incorrectly "educate" the organization about what charitable organizations can do and to dissuade them from seeking exemption as well. Not only was the standard unconstitutional but it was incorrect. While the IWF has always refrained from taking a position on the issue of abortion, we can certainly applaud what pro-life lawyer Erik Stanley said about unconstitutional standards at the IRS in an an interview with National Review:

I interpreted the IRS agent’s statement as attempting to impose an unconstitutional standard for granting tax exemption. The agent had told Pro-Life Revolution on numerous occasions that it could not “confront” other people with the views of the organization and that it had to remain “neutral” on the issue of abortion. That standard is unconstitutional because it prohibits a group from advocating the truth of its beliefs. The IRS should not be in the position of mandating that groups seeking a tax exemption remain neutral on controversial issues. That’s not only unconstitutional, but ridiculously impractical. For example, churches are exempt under the tax code but they do not have to remain “neutral” on the issue of religion.

The only “boundaries” on exempt organizations are those that are in the law, namely, that they serve a charitable function, that they refrain from endorsing or opposing political candidates (an unconstitutional restriction we are attempting to challenge by our Pulpit Freedom Sunday initiative), and that they only engage in an insubstantial amount of lobbying. There is no boundary imposed in the law that an organization not advocate its viewpoint.

… Jefferson said, “Eternal vigilance is the price of liberty.” We must remain committed to holding all governmental officials to the Constitution. The IRS should not remain unaccountable to the American people for its unconstitutional actions.

As I have said already, there are larger concerns with the recent IRS scandals. The IRS and by extension the government should not be in the business of choosing winners and losers among nonprofit private organizations. Showing partisan treatment (whether in support or opposition) to organizations based on their missions strikes at the heart of critical freedoms of association, speech and religious practice. That stifles the vitality our civil society. It also jeopardizes the sector that allows individuals to organize around their preferred philosophies and educate others about their views. Civil society should be above politics and the whim of social mores.

What happens when a group supporting another unpopular point of view seeks exemption? Will they receive the same level of scrutiny? Congress must get to the bottom of this scandal so that this never happens again. Otherwise, it most certainly will.

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Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.